Re-mortgage - How long should I fix

RoyalSwank

Hello all,

Re-mortgage is due in a few months and FA has advised to get something now that we can draw down on in a few months as rates look set to rise.
Oustanding Mortgage is c. £165 in total. House worth roughly £225K
Have a young family - me and OH have good jobs.

FA has come back with a few options:
2Y fix 3.74% - £995 fee
3Y fix 4.19% - £999 fee
5Y fix 4.94% - £995 fee

My question is basically about fixing. With rates rumoured to be on the rise to combat inflation should I be looking at a longer term fix?? This is what I'm leaning towards.
I know this is a bit of a crystal ball question, but I'm looking for some opinions to help me decide.
Cheers, RS

CloudCuckooLand

1.24% difference between 2 and 5 years. Rates will have increased by more than that in two years time...making the next 2yr fix at 5%+

5 years, imo, unless the SVR you drop onto is tempting enough for a 6 month punt...

pimento

I have a similar question.

Our 4.99% five year fix somes to an end at the end of May 2011. £68000 mortgage with 15 years left. C&G will move me to their SVR which currently is base plus 2%, so 2.5% at the moment. My payments will go down from £530 to £442 a month.

They can also offer me a 3 year fix at 4.39% (No fees) or a Five year fix at 4.94% (No fees).

My immediate thought was to go with the SVR but is there something I'm missing? It all sounds too good to be true.

Oh and they will reserve one of the fixes if I want for 120 days.

Will I ever find another fixed rate mortgage that's fee free?

GuidoT

Pimento, personally I would take the C&G SVR for now and keep an eye on rates - I have a C&G SVR deal on a buy to let and yes it is very good indeed and I expect it will be for a while.

Do not think we should hijack RS's thread anymore.

GuidoT

RS - as CCL says what does your mortgage revert to?

RoyalSwank

I'm not 100% sure - it's with Abbey and I think the current SVR is 4.24%

GuidoT

You need to check your mortgage offer to be sure, but I suspect it will go to the SVR.

The Abbey / Santander SVR of 4.24% is one of the highest in the industry.

I would not stay with it, although SVRs are not generally directly linked to IRs, IRs are likely to go up soon and no doubt Abbey will then increase their SVR.

Personally I would go with the 3 year fixed deal, but only you can decide depending on how much headroom you have on your finances.

RoyalSwank

We can afford the 5 year and have some headroom. Just wondering what people think is the 'best bet'
The 3Y might be a reasonable compromise though, but will IRs be lower than 5% in 3 years??

dimbo61

Are you allowed to overpay and do you plan on staying long term in the property ?
I have just finished a 5 year fix and overpaid as much as possible during that time!
Rates have NEVER been this low long term security and a 5 year deal under 5%

puresilk

Your in a good position, rates are historically low and persistent rumours they are going to go up. And there is only one direction they will go and that is up!

Fix it for 5 and enjoy peace of mind!
Id love to be in your position.

RoyalSwank

Yes, we can overpay on the 5Y fix (and I'd like to do this, though as we have a young family and are getting married this year we probably wouldn't overpay for a few years)
We'd both like to move to somewhere bigger, but we're also happy where we are so I couldn't see us moving in the next 5 years unless a great opportunity came up.
Looks like that balance of consensus is that the 5Y deal is the best bet in the long term?